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The evidence for those who are bearish on China’s future prospects isn’t hard to find. Property values are falling, soured bank loans are rising, and the rate of new-home construction has dropped about 25 per cent so far this year.

Beijing is targeting GDP growth of a mere 7.5 per cent this year and next, down from the double-digit rates of the 2000s. A bearish Nomura Securities, a major Japanese securities firm, declared in a recent report that 6.8 per cent GDP growth in 2014 is more likely.

The bearish thinking goes: China has experienced an almost uninterrupted boom for about 35 years, since the country’s economic liberalization policies of the late 1970s. If the history of booms is any guide, a painful “correction” is long overdue.

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Foreign investors have been curbing their enthusiasm for China. So have local investors.

Hong Kong-based Li Ka-shing, the richest tycoon in Asia, has mounted what locals call an “evacuation” of his Chinese investments. Li, whose Canadian assets include a controlling stake in Calgary’s Husky Energy Inc., has sold an estimated $2.9 billion (U.S.) worth of flagship properties in China. Li is reported to have gotten only 70 per cent of his asking price for Pacific Century Place, a twin-tower landmark in Beijing.

There may be a touch of schadenfreude to the over-heated reporting on China’s slowdown, arising from China’s once unthinkable eclipse of Japan as the world’s second-largest economy two years ago. At least one forecast has China’s economy overtaking that of the U.S. as early as next year — a recent revision of earlier predictions that set that event at mid-century.

For all the signs of reversal, China is still prospering, and will likely continue to set the pace for GDP growth among major economies. Truth be told, most of those would be over the moon with a GDP growth rate of “only” 6.8 per cent. (The GDP of Canada and the U.S. will grow by 2 to 3 per cent this year and next.) “There has been hard-landing talk about China on and off for more than two years,” Hurst Lin, a Beijing-based general partner at venture capital firm DCM, recently told CNN Money. “It’s unclear if there is real reason to be concerned or if it’s just a case of the Western press saying it is so.”

In a worst-case scenario, the People’s Bank of China, the central bank, would resume the fiscal and monetary stimulus it used to cushion the blow during the worst years of the Great Recession. China’s biggest commercial banks are state-controlled, which means they are effectively backstopped by China’s trillions of U.S. dollars in cash reserves.

And China is far from the danger zone for asset collapses caused by exhaustion of credit expansion. That occurs when bank credit to corporations approaches 250 per cent of GDP. The current Chinese ratio is just 140 per cent. “As we are substantially more optimistic on (China’s) growth than the consensus,” the Royal Bank of Scotland PLC said in a report this week, “we still expect GDP growth to come out at 7.7 per cent this year.”

To a significant degree, China’s slowdown has actually been orchestrated by a Beijing in pursuit of sustainable growth, not the volatile and speculative short-term variety. Lending restrictions have been in place for about two years. They didn’t affect projects underway, but are now kicking in for proposed developments seeking financing. Most observers would regard this restraint as sensible. China already boasts about 200 skyscrapers that are more than 250 metres tall, or about four times the number in the U.S.

True, this might not be the best of times for day traders playing Chinese stock indices that have been falling — by a whopping 19.6 per cent since its February peak, in the case of the tech-heavy ChiNext index.

But a long-term bet on China would take into account the hundreds of millions of peasants yet to move from agriculture to the manufacturing and high-tech work in the Pacific coastal megacities. As it is, those who’ve already migrated still hoard rather than spend, partly because they are not yet eligible for welfare, housing and other social supports. They also commit much of their income to remittances to relatives in rural areas. These factors suggest a significant upside in consumer spending.

Beijing is determined that China no longer be the rare economic power that does not have consumer spending as a prop for the economy when manufacturing and investment take a tumble. In March, China’s political leadership declared that the country must “fully tap the enormous (consumer) potential of more than a billion people.”

This “rebalancing” of the Chinese economy has been underway for several years. Retail spending shot up by low double-digits in each of the past three years, a healthy phenomenon disguised by continued high investment spending until recently.

A well-known legacy of the country’s “one-child policy” is the current shrinking of China’s working-age population. Local governments have responded with minimum wages to lure and keep workers. That has boosted household income and consumer buying power. Average wages for migrants to cities from the agricultural interior have roughly doubled in the short span between 2005 and 2011. They gained another 14 per cent last year.

The pent-up buying power of the Chinese consumer economy, trailing in size only that of the U.S., is sufficient to fuel a second Industrial Revolution in China. GDP growth might be taking a breather, but consumer spending is stable and expected to rise. Given those factors, Andy Rothman , investment analyst at securities firm Matthews Asia, recently told The Economist that China is “hands down the best consumption story on the planet.”

The sell-off of Chinese stocks has made many of them bargain priced. The average price-earnings multiple (p/e) for Chinese stocks is only 7.6, compared with 12.3, 13.8, 16.8 and 18.4 for British, German, U.S. and Japanese stocks, respectively.

The Industrial Revolution in the West was characterized by booms and busts, financial “panics” and bankrupt railways (the infrastructure projects of that era).

Had you bet against that revolution, you would have missed out on perhaps the greatest investor bonanza in history. The bullish view on China, for now the contrarian one, is expressed by Jim Oberweis, co-manager of the Oberweis China Opportunities Fund. Oberweis told CNN Money last week that “I’m a lot less worried about a slowdown in China, because everyone else is worried.”

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